Benefit Options Annual Report 2010 Addendum

State of Arizona
Arizona Department of Administration
Benefit Services Division
Annual Report
Benefit Options Addendum
October 1, 2010 through December 31, 2010
Scott A. Smith
Director
Arizona Department of Administration
Janice K. Brewer
Governor FOREWORD
Benefit Options is the program name for the various benefits offered to State of Arizona employees and retirees. This report was prepared to give a broad overview of Benefit Options.
The information provided in the report was gathered from contracted vendors participating in the Benefit Options insurance programs. This report was compiled to meet the requirements of A.R.S. §38-652 (G) and A.R.S. §38-658 (B).
The data shown is presented for the period October 1, 2010 through December 31, 2010.
This report is an addendum to the Annual Report published for the October 1, 2009 through September 30, 2010. This report reflects data required to be reported as a result of the change in the plan year. The plan year now begins January 1 of each calendar year.
Any questions relating to the contents of this report should be addressed to:
Benefit Options
Arizona Department of Administration,
Benefit Services Division
100 N. 15th Avenue, Suite 103
Phoenix, Arizona 85007
Telephone: 602-542-5008
Fax: 602-542-4744 ContentsReport Background1Executive Summary2Health Insurance Trust Fund Summary4Enrollment in Benefit Options Medical Plans5Expenses vs. Premiums for Active and Retired Members7Expenses for Benefit Options Self-Funded Plans8Medical Expenses Associated with Medical Diagnoses9Hospital Care10Emergency Room Visits12Urgent Care Visits12Physician Visits12Generic and Name-Brand Prescription Use14Prescription Use by Therapeutic Class14Prescription Use by Type of Drug15Annual Prescription Use16Annual Pharmacy Expenses by Age17Benefit Options Dental Plans18Dental Rates19Life, Disability, Vision Insurance and Flexible Spending Accounts Premiums20Health Insurance Vendor Performance Standards21Audit Services27Glossary of Terms28Appendix A - Plan Year Cash Flow Reconciliation31Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 1
Report Background
This document has been assembled to report the financial status of the Employee Health Insurance Trust Fund pursuant to A.R.S. §38-652 (G), which reads:
G. The department of administration shall annually report the financial status of the trust account to officers and employees who have paid premiums under one of the insurance plans from which monies were received for deposit in the trust account since the inception of the health and accident coverage program or since submission of the last such report, whichever is later.
The Benefit Options program is accounted for in two different funds. The Special Employee Health Fund, also known as fund 3015 or the Health Insurance Trust Fund (HITF), encompasses the medical and dental programs and the appropriated expenditures for ADOA Benefit Services operations. The ERE/Benefits Administration Fund, fund 3035, is primarily a “pass through” fund for other benefits including vision, disability insurance, life insurance and flexible spending accounts.
The benefits offered through the program fall into one of two types — self-funded and fully-insured. The health benefit plan is self-funded; whereas the dental plans, vision plan, disability insurance, and life insurance plans are fully insured.
The State’s self-funded medical plan began on October 1, 2004, and consists of a carved out pharmacy plan with two options for the medical plan, integrated or non-integrated. The integrated option combines the functions of claims review and payment, network access, and utilization review and utilization management (URUM) which includes case management and disease management. The non-integrated option is similar, but the URUM function is carved out to a separate contract.
Schedules of premiums received; incurred and paid medical/drug claims; expenses related to the medical and dental plans; and distribution by enrollment are included within this document as accounted for in fund 3015. A summary of premiums collected and paid for life insurance, vision insurance and flexible spending accounts has also been included for fund 3035. The Cash Flow Reconciliation charts for the two funds can be found in Appendix A. The difference in the values presented in Appendix A and the Health Insurance Trust Fund (HITF) Summary on page 4 is a result of timing difference between when premiums and/or services are incurred and when they are paid. Appendix A was prepared on a cash basis, where as, the HITF Summary was prepared on an accrued and paid basis.
All data provided herein is for the period October 1, 2010 through December 31, 2010. Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 2
Executive Summary
The passing of Health Care Reform by the Federal Government initiated a review of the plan year cycle. It was determined that the plan year should be moved to a calendar year for tax reporting purposes effective January 1, 2011. In order to effect a smooth transition to the new plan year, a mini-plan year was offered from October 1, 2010 through December 31, 2010, with no change in premium structure or contribution strategy from the ending 2009-2010 plan year. Due to this uncommon event and its unique characteristics, there are no similar reporting periods to which a comparison may be performed. Therefore, there is no comparative data presented in this report.
During the reporting period, October 1, 2010 through December 31, 2010, the Benefit Services Division (BSD) Health Plan offered a comprehensive insurance package to over 128,000 members consisting of active State employees, University staff, retirees, and their qualified dependents. The benefit options include; medical, pharmaceutical, dental, flexible spending, vision, life, and disability insurance.
To ensure the efficiency and effectiveness of the State Health Plan, BSD Audit Services maintained a multi-directional audit plan which includes; contract compliance auditing, quality management reviews, process improvement, and plan design evaluation. Audits scheduled and completed this plan year consist of: dependent eligibility, vendor operating transactions, vendor internal operating standards, and vendor execution of benefit design. The audit plan has been strategically developed to identify potential loss and facilitate corrective action, in continuing efforts to improve plan performance and cost effectiveness.
For the reporting period, the total premiums expected were $193,928,037 with expected total expenses for the plan of $191,367,466, resulting in an expected net operational gain of $2,560,570.
The 2009-2010 contribution strategy for medical resulted in employees paying 10.61% of the average monthly total premium, while the State paid the remaining 89.39%. However, the contribution strategy for dental resulted in employees paying 84.21% of the average monthly total premium, while the State paid the remaining 15.79%. Retirees are fully responsible for payment of their premiums, but typically receive a subsidy through the respective retirement system to offset a portion of the cost. COBRA is offered to termed employees at 102% of the total premium. However, if qualified under the American Recovery and Reinvestment Act (ARRA), a COBRA member would pay only 35% of the total COBRA premium with the remaining 65% COBRA Premium Assistance portion to be collected through a reduction of employer paid payroll taxes.
The analysis of expenses for the reporting period indicated the average cost to insure each member was $5,554. However, when analyzed by type of subscriber; the active members average cost was $5,360 compared to the average retiree cost of $7,821. This difference in average cost between active and retired members is a common trend. There is a direct relationship between the age of an insured member and their cost for health care. Senior members usually require an increased amount of medical care, including additional pharmaceuticals, to maintain their quality of life. Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 3
Medical claims expenses accounted for $104,881,454 of the total cost the health plan during the reporting period. When analyzed by cost, the five leading diagnosis categories are: musculoskeletal system (muscles and joints), circulatory system (heart), neoplasm (cancers), genitourinary system (kidneys and reproductive organs), and digestive system. Musculoskeletal system was the leading category with $13,143,046 or 12.53% of total claims paid.
Examination of hospital care reveals that inpatient care represents a significant portion of the total medical expenses: 36.63% and 31.39% for active and retired members respectively. Analysis by the type of medical care visit reveals there were 157 emergency room, 135 urgent care, and 3,960 physician visits per 1,000 members covered under the self-insured plan; which indicates members are seeking the care of a physician or specialist for the majority of their medical needs.
The cost of prescription drug claims for the period totaled $27,635,461 and a reported 386,030 prescriptions were filled. The top five most expensive drugs classes are described as maintenance drugs used to control and prevent chronic diseases. Diabetes drugs lead the list with 2.59 million dollars or 9.21% of total pharmacy costs. Other leading categories were cardiovascular disease, asthma, behavioral health, and inflammatory disease. The most prescribed drug according to total expense is Lipitor, typically prescribed for treating and preventing high cholesterol.
Retirees on the State health plan filled an average of 14.2 prescriptions for the period, while active members averaged 8.2. Similar to medical cost per member, the pharmaceutical expense per member increases as the members age increases. Analysis indicates that the 40-64 age group annual prescription drug cost is $877 per member compared to the 65+ age group cost of $1,448 per member. As a result the smaller population of insured retirees attributes the majority of prescription expenses.
In addition to managing the volume statistics and expenses of the Program, the State manages performance measures with specific financial guarantees. These financial guarantees are tied to the contracted performance of the vendors providing services. If a vendor fails to meet any of the measures, a percentage of the annual administrative fee is withheld by ADOA as performance penalties. During the October 1, 2010 through December 31, 2011, ADOA collected penalties totaling $5,000 for the previous Plan Year. An assessment of vendor performance for the October 1, 2010 through December 31, 2010 period is provided in the Health Insurance Vendor Performance Standards section of this report.
In review, the October 1, 2010 through December 31, 2010, period continued to demonstrate a balance of expenses and premiums that allowed the State to offer members comprehensive and affordable insurance coverage. The State effectively controlled the rise in health care costs through quality benefit design, administrative oversight, strategic planning and auditing, and effective contract management. Detailed evidence of the State’s Health Plan accomplishment can be reviewed herein. Health Insurance Trust Fund Summary
Table 1 provides a summary of receipts, expenses, and enrollment incurred during the October 1, 2010 through December 31, 2010 Mini-Plan Year and paid through March 2011.
ADOA Benefit Options refers to the self-funded medical program and includes Aetna, Blue Cross Blue Shield of Arizona administered by AmeriBen, CIGNA, and United Healthcare networks. BCBS (NAU), and all dental plans are fully-insured.
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 4
State and University employees and retirees choose coverage from one of the self-funded networks. However, Blue Cross Blue Shield is a fully-insured option available only to NAU employees and NAU retirees.
The Medicare Part D Subsidy is available to employers who provide a qualified pharmacy plan to Medicare-eligible retirees. Rebates & Recoveries consist of rebates paid by drug manufacturers, performance penalties assessed to contractors for not achieving performance guarantees, overpayment recoveries and stop-loss reinsurance payments. Reserve (IBNR) is the amount of money that must be held in reserve for the purpose of paying claims that have been incurred but have not been reported. Stop-loss is a “catastrophic claim” reinsurance program that covers individual medical/drug plan expenses over $500,000 with a lifetime maximum of $2 million.
Table 1: Health Insurance Trust Fund SummaryOctober 1, 2010 -December 31, 2010 Receipts (accrual basis)ADOA Benefit Options174,545,324 BCBS (NAU)8,462,079 Dental10,920,634 Total193,928,037 ExpensesMedical Claims (accrual basis)104,881,454 Drug Claims (accrual basis)27,635,461 ERRP Reimbursement(2,456,920) Medicare Part D Subsidy*- Rebates & Recoveries(2,851,784) Reserves for future benefits36,130,740 BCBS Payments8,569,657 Administration Fees7,682,583 Stop-Loss Premiums839,462 Appropriated Expenses1,107,953 Dental Costs10,086,030 Total191,624,636 Difference2,303,401 EnrollmentSubscribers61,033 Members128,983
*No Medicare Part D subsidy was received during the reporting period. Enrollment in Benefit Options Medical Plans
The Benefit Options group medical plan is available to all:
•
eligible State employees and University staff, officers, and elected officials
•
State retirees receiving pension benefits through any of the State retirement systems
•
State employees or University staff accepted for long-term disability benefits
•
employees of participating political subdivisions
��
State employees or University staff eligible for COBRA benefits
The table below shows how enrollment was distributed between networks and between active, retired, and university members.
NetworkPlan TypeSubscribersMembers *AETNAActiveEPO11602622RetireeEPO284360UniversityEPO11642097COBRAEPO2334ActivePPO90152RetireePPO6782UniversityPPO145240COBRAPPO0ActiveHSAO121218RetireeHSAO--UniversityHSAO171316COBRAHSAO45AmeriBenActiveEPO557313789RetireeEPO11451525UniversityEPO16163352COBRAEPO6288ActivePPO222398RetieePPO202245UniversityPPO281531COBRAPPO66CIGNAActiveEPO28236740RetireeEPO701914UniversityEPO11742331COBRAEPO1923Table 2: Average Monthly EnrollmentOctober 1, 2010 - December 31, 2010 Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 5
NetworkPlan TypeSubscribersMembers *UnitedHealthcareActiveEPO2231152289RetireeEPO49556464UniversityEPO1201726427COBRAEPO288382ActivePPO6091102RetireePPO171222UnivesityPPO7481421COBRAPPO1722Blue Cross Blue ShieldNAU onlyPPO28644585Total61033128983* NAU and COBRA dependent is an estimated number based onOctober 1, 2010 - December 31, 2010 Continuation Table 2: Average Monthly Enrollment
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 6
Expenses vs. Premiums for Active and Retired Members
The figure below shows how the average monthly premiums compared to the average monthly cost for active and retired members. $-$100.00$200.00$300.00$400.00$500.00$600.00$700.00Active PremiumActive ExpenseRetiree PremiumRetiree ExpenseFigure 1: Average Monthly Premiums and Expenses per MemberSubscriber PaidState PaidDrugsMedicalAdministrative 10/01/2010 - 12/31/201010/01/2010 - 12/31/2010
ADOA developed a contribution strategy that provided affordable health insurance to all State and University employees. The EPO plan was offered to employees for single coverage, employee plus adult, employee plus child, and family coverage at the cost of $39, $97, $79 and $178. PPO monthly premiums were determined from actual experience and the true cost of the coverage.
The 2009-2010 contribution strategy for medical resulted in employees paying 10.61% of the average monthly total premium, while the State paid the remaining 89.39%. The contribution strategy for dental resulted in employees paying 84.21% of the average monthly total premium, while the State paid the remaining 15.79%.
Pursuant to A.R.S. §38.651.01(B.), retiree and active medical expenses shall be grouped together to “obtain health and accident coverage at favorable rates.” This requirement results in retiree premium rates lower than what their experience would otherwise dictate.
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 7
Expenses for Benefit Options Self-Funded Plans
The tables below show the distribution of the self-funded expenses. Table 3 shows the expenses distributed between active/retiree and EPO/PPO members. The average annual cost to insure each type of subscriber/member is also provided.
Table 3: Self-funded expenses by active, retiree, EPO, and PPO subscribers and members*ExpensesOverallActiveRetireeEPOPPOHSAOMedical Claims (accrual basis)104,881,454 95,499,699 9,381,755 99,357,245 5,443,057 81,152 Drug Claims (accrual basis)27,635,461 20,692,552 6,942,908 25,566,670 2,039,636 29,154 ERRP Reimbursement(2,456,920)(2,456,920)(2,300,407)(156,513)Medicare Part D Subsidy+0000Rebates & Recoveries(2,828,390)(2,479,963) (348,427) (2,666,328) (159,708) (2,354) Reserve (IBNR)36,130,740 31,679,820 4,450,920 34,060,508 2,040,157 30,075 Administration Fees7,425,4146,464,798960,6167,061,141326,48937,785 Stop-Loss Premiums839,462730,862108,600798,28036,9104,272 Appropriated Expenses1,107,953964,619 143,3341,053,60048,7165,638 Total$172,735,174153,552,38719,182,787162,930,7099,618,744185,721 Enrollment in self-funded plansSubscribers58,170 50,644 7,525 55,316 2,558 296 Members124,398 114,587 9,811 119,437 4,422 540 Annualized costPer subscriber$11,878 12,128 10,196 11,782 15,043 2,510 Per member$5,554 5,360 7,821 5,457 8,701 1,377
*The data is for the incurred period October 1, 2010 through December 31, 2010.
+No Medicare Part D subsidy was received during the reporting period.
Table 4 below shows the distribution of expenses by benefit plan.
Table 4: Self-funded Expenses by Active, Retiree, EPO, and PPO Subscribers and Members*Expenses (in dollars) OverallActive/ EPOActive/ PPOActive/HSAORetiree/ EPORetiree/ PPOMedical Claims (accrual basis)104,881,45490,591,874 4,826,672 81,152 8,765,371 616,385 Drug Claims (accrual basis)27,635,46119,105,914 1,557,484 29,154 6,460,756 482,152 ERRP Reimbursement(2,456,920)(2,300,407)(156,512.96) Medicare Part D Subsidy+000Rebates & Recoveries(2,828,390)(2,341,347) (136,261) (2,354) (324,981) (23,447) Reserve (IBNR)36,130,74029,909,104 1,740,640 30,075 4,151,404 299,516 Administration Fees7,425,4146,156,691270,32237,785904,45056,166Stop-Loss Premiums839,462696,03030,5614,272102,2506,350Appropriated Expenses1,107,953918,646 40,335 5,638 134,954 8,381 Total$172,735,174145,036,9128,329,754185,72117,893,7971,288,990 Enrollment in self-funded plansSubscribers58,170 48,231 2,118 296 7,085 440 Members124,398 110,174 3,873 540 9,263 549 Annualized costPer subscriber$11,878 12,029 15,734 2,510 10,102 11,718 Per member$5,554 5,266 8,603 1,377 7,727 9,397
*The data is for the incurred period October 1, 2010 through December 31, 2010.
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 8
Medical Expenses Associated with Medical Diagnoses
The table below shows how medical expenses were distributed among different diagnoses. More dollars are spent on treating conditions related to the musculoskeletal system than on any other type of disorder.
Table 5: Medical expenses by diagnosis –actives & retireesActivesRetireesAll membersDiagnosis% of Total% of Total% of TotalMusculoskeletal System12.44%13.46%12.53%Health Status (lab tests, etc.)10.66%9.27%10.54%Ill-defined19.52%7.81%9.37%Circulatory System9.25%10.49%9.36%Neoplasm (tumors)8.97%12.68%9.30%Genitourinary System7.67%10.10%7.89%Digestive System7.11%8.17%7.20%Injury/Poisoning7.25%6.59%7.19%Nervous System5.06%8.90%5.41%Respiratory System5.12%3.43%4.97%Endocrine4.30%3.63%4.24%Pregnancy/Childbirth Complications4.14%0.01%3.77%Mental Health2.51%1.11%2.39%Infectious/Parasitic2.19%1.05%2.09%Skin and Subcutaneous Tissue1.68%2.14%1.72%Blood and Blood Forming Organs1.09%1.00%1.09%Congenital Anomalies0.74%0.16%0.69%Conditions in the Perinatal Period0.30%0.00%0.27%External Causes of Injury/Poisoning0.00%0.00%0.00%Grand Total100.00%100.00%100.00%October 1, 2010 - December 31, 2010
Note: Some statistics may vary slightly from previous annual reports due to the late receipt of program data following the completion of the previous annual report. In no case does the variation represent a substantive change in trend or comparative values.
1The ill-defined category is a technical term including symptoms, laboratory results and disorders which cannot be categorized elsewhere. Examples of ill-defined diagnoses are: adult convulsions not related to epilepsy, and laboratory analysis of blood with findings not related to cellular abnormality.
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 9
Hospital Care
Inpatient hospital care represents a significant portion of total medical expenses: 36.63% and 31.39% for active and retired members, respectively. The figures below show how active/retired members and EPO/PPO/HSAO members’ hospital admissions compared based on the number of admissions and the average length of stay. Active 59.8 Retiree 189.2 EPO65.9 PPO72.2 HSAO 44.0 -20.040.060.080.0100.0120.0140.0AdmissionsOctober 1, 2010 - December 31, 2010Figure 2: Admissions per 1,000 Members Active 3.7 Retiree 6.2 EPO 4.2 PPO 3.6 HSAO 6.9 -1.02.03.04.05.06.07.0October 1, 2010 - December 31, 2010Figure 3: Average Length of Stay
Note: Mental health, substance abuse, and maternity admissions are included. Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 10
Hospital Care (continued)
The figures below show how active/retired members and EPO/PPO/HSAO members compared statistically in collective number of hospital days and average cost per admission. As a group, retirees spent 4 times as many days in the hospital as active members. Also, PPO members spent about the same days in the hospital as EPO members. On average, PPO members cost per admission was $3,685 higher than EPO members. Active 224.0 Retiree 858.4 EPO274.3 PPO261.5 HSAO304.0 -100.0200.0300.0400.0500.0600.0700.0800.0900.0October 1, 2010 - December 31, 2010Figure 4: Days per 1,000 MembersActive $13,544Retiree $14,627EPO $13,806PPO $17,491HSAO $21,563$0$5,000$10,000$15,000$20,000$25,000October 1, 2010 - December 31, 2010Figure 5: Average Cost per Admission
Note: Mental health, substance abuse, and maternity admissions are included. Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 11
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 12
.
room visit was $1,288. These figures include
nal fees.
00
of the self-funded plan. The average plan cost per urgent care visit was
cian approximately 4.0
Emergency Room Visits During the reporting period, October 1, 2010 through December 31, 2010, there were approximately 157 emergency room visits per 1,000 members of the self-funded planThe average plan cost per emergency
fa
cility claims and professio
Urgent Care Visits During the reporting period, there were approximately 135 urgent care visits per 1,0members
$
90.00.
Physician Visits During the reporting period, there were approximately 3,960 physician visits per 1,000 members (or each member of the self-funded plan visited a physi
tim
es). The average plan cost per office visit cost was $94.88.
F
igure 6 indicates total active medical expense distribution by type of care. Figure 6: Active Employee Medical Expense by Place of ServiceOther, 0.13%Urgent Care Facility, 0.10%Ambulatory Surgical Center, 3.69%Emergency Room, 1.45%Outpatient Hospital, 26.77%Office, 26.24%Inpatient Hospital, 36.63%Ambulance, 0.31%Independent Laboratory, 2.28%Home Health, 2.40%Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 13
igure 7 indicates total retiree medical expense distribution by type of care
FFigure 7: Retiree Medical Expenses by Place of Service27.98%Independent Laboratory, 2.11%Ambulance, 0.18%Home Health, 3.52%Ambulatory Surgical Center, 4.10%Outpatient Hospital, 28.55%Other 1.31%Urgent Care Facility 0.05%Inpatient Hospital 31.39%Emergency Room 0.81%Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 14
eneric and Name-Brand Prescription Use
xpenses were distributed among generic,
referred, and non-preferred types of drugs.
rescription Use by Therapeutic Class
xpense. More dollars were spent on "Diabetes", than on any other therapeutic class.
G
The table below shows how total pharmacy e
pTable 6: Claim distribution for 3-tier formularyTotal PrescriptionsPercentTier 1 Generic ($10 copay)271,486 70.3%Tier 2-Preferred ($20 copay)87,666 22.7%Tier 3-Non-Preferred ($40 copay)26,878 7.0%October 1, 2010 - December 31, 2010
P
The table below shows the ten most utilized classes of drugs according to total
e
Table 7: Top therapeutic classes by total expenseTherapeutic classTotal CostPercentDiabetes$2,590,6699.21%Cardiovascular Disease - Lipid$2,559,8829.10%Asthma$2,033,3437.23%Behavioral Health - Other$1,986,6207.06%Behavioral Health - Antidepressants$1,782,6996.34%Inflammatory Disease$1,759,3146.25%Pain Management - Analgesics$1,337,0324.75%Upper Gastrointestinal Disorders - Ulcer$1,263,4434.49%Cardiovascular Disease - Hypertension$1,256,6224.47%Infectious Disease - Viral$1,157,9784.12%Total$17,727,60263.00%October 1, 2010 - December 31, 2010 Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 15
rescription Use by Type of Drug
Lipitor, a
holesterol controlling medication, is the leading prescription for the plan year.
Total $5,717,667 20.32%
P
The table below shows the ten most utilized drugs according to total expense.
c
Table 8: Top ten drugs by total expenseDrug NameTotal Gross CostPercentLipitor939,637 3.34%Humira644,614 2.29%Crestor608,878 2.16%Singulair555,555 1.97%Enbrel551,340 1.96%Advair diskus539,332 1.92%Plavix515,358 1.83%Cymbalta491,188 1.75%Actos441,690 1.57%Copaxone430,075 1.53%October 1, 2010 - December 31, 2010 Annual Prescription Use
The figure below compares the average number of prescriptions filled during the reporting period by active and retired members. Active 8.2 Retiree 14.2 -2.04.06.08.010.012.014.016.0October 1, 2010 - December 31, 2010Figure 8: Average Number of Prescriptions per Member
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 16
Annual Pharmacy Expenses by Age
The figure below shows how pharmacy expenses increase with age among plan members. 3244378771,44802004006008001000120014001600October 1, 2010 - December 31, 2010Figure 9: Pharmacy Expense per Utilizer (in dollars)0-18 yrs19-39 yrs40-64 yrs65+ yrs
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 17
Benefit Options Dental Plans
Prepaid Plan – Total Dental Administrators (TDA)
•
See a Participating Dental Provider (PDP) to provide and coordinate all dental care.
•
No annual deductible or maximums ($200.00 maximum reimbursement for non-contracted emergency services) under Total Dental Administrators.
•
No claim forms (except for emergency services).
Indemnity/PPO Plan – Delta Dental Premier
•
May see any dentist. Deductible and/or out-of-pocket payments apply.
•
A maximum benefit of $2,000 per person per plan year for dental services.
•
$1,500 per person lifetime for orthodontia.
•
May need to submit a claim form for eligible expenses to be paid.
•
Benefits may be based on reasonable and customary charges.
The following figures show how active employee and retiree dental enrollments were distributed among plans. Figure 10: Active Employee Dental EnrollmentDelta Dental 68%Total Dental 32%
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 18
Figure 11: Retiree Dental EnrollmentDelta Dental 82%Total Dental 18%
Dental Rates
The table below summarizes monthly dental rates for active and retired members.
Table 9: Summary of Monthly Dental RatesActive EmployeesEmployeeStateTotalEmployeeStateTotalEmployeeStateTotalDelta Dental$29.86$4.96$34.82$67.93$9.92$77.85$118.12$13.70$131.82Total Dental Admin.$5.00$4.96$9.96$9.00$9.92$18.92$14.00$13.70$27.70RetireesDelta Dental$34.82$77.85$131.82Total Dental Admin.$9.96$18.92$27.70 Single Coverage Family Coverage Single Coverage Family Coverage Employee +One CoverageEmployee +One Coverage
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 19
Life, Disability, Vision Insurance and Flexible Spending Accounts Premiums
The table below shows the amount of premiums collected and paid for life insurance, disability insurance, vision insurance and flexible spending accounts (FSA).
Table 10: Summary of Earned PremiumsVendorCollectedPaidHartford*^Basic Life(597,717.31)$ Supp Life2,883,848.62$ Dep Life673,778.17$ STD1,956,956.86$ LTD772,247.83$ Total5,689,114.17$ 5,855,242.50$ Other*Basic Life-$ STD(23.65)$ LTD890.94$ Total867.29$ 5,000.00$ Avesis* - Vision1,076,448.88$ ASI - FSA1,003,349.90$ Total7,940,041.28$ * Per contract, vendors paid 55 days in arrears.October 1, 2010 - December 31, 2010 ^ Collected amounts for Standard are residual collections due to timing of receipts from universities and members in leave without pay status.
Addendum - October 1, 2010 through December 31, 2010 Benefit Options 2009-2010 Annual Report
20
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 21
Health Insurance Vendor Performance Standard
Pursuant to A.R.S. § 38-658(B), the Arizona Department of Administration (ADOA) shall “...report to the Joint Legislative Budget Committee at least semiannually on the performance standards for health plans, including indemnity health insurance, hospital and medical service plans, dental plans and health maintenance organizations.”
Among the terms of the self-funded health insurance contracts are a number of ADOA-negotiated performance measures with specific financial guarantees tied to the contracted performance of the vendors providing various services for the health plans. If a vendor fails to meet any of the measures within the specified performance range, a percentage of the annual administrative fee is withheld by ADOA as performance penalties. This percentage is allocated among the more critical measures of the contract.
The following is a report of the performance penalties incurred by health plan vendors for their non-performance during the Mini Plan Year starting October 1, 2010 ending December 31, 2010. The details of each assessment are set forth in the exhibit specified by the same letter that identifies the vendor below.
A. UHC (Claims Administrator) – penalties to date of $3,187.47, equaling .03% of the vendor’s administrative fee.
MEASURE
Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
Average Speed to Answer <30 seconds
.50%
•
0.03%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: This metric was missed on the last day of the month when we had significant fluctuations in call volume and unanticipated staff out of the office. The site director of our dedicated team provided more security in coverage to prevent this from happening in the future. We confirmed this was isolated and not indicative of overall poor performance.
B. AmeriBen (Claims Administrator) – penalties to date of $449.27, equaling 0.06% of the vendor’s administrative fee.
MEASURE
Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
Written appeals resolved in 45 calendar days after
0.13%
•
0. 04%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED receipt of participant’s request for review in the case of post-service claims.
•
Corrective Action: The appeal target was missed due to contracting with a new external review vendor. The contract has been finalized so no further action is necessary.
Contractor will deliver its monthly reports to the ADOA within 30 calendar days from the end of the month.
0.06%
•
0. 02%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: Clerical error resulted in late transmission of this data to the ADOA as required. To prevent future late reporting, an internal team has been established to monitor and ensure all information is compiled in advance of the due date. A notification will be sent to the Account Manager upon completion of the reporting, the Account Manager will document transmission of reports to ADOA.
Contractor will provide a detailed provider report which identifies providers by TIN number.
0%
•
0%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: AmeriBen’s Internal Audit Specialist will confirm the transmission on or before the due date.
Contractor will provide a detailed provider report which identifies providers by TIN number.
0%
•
0%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: AmeriBen’s Internal Audit Specialist will confirm the transmission on or before the due date.
B. AmeriBen (Claims Administrator)continued
C. Cigna (Claims Administrator) – penalties to date of $643.22, equaling .14% of the vendor’s administrative fee.
MEASURE
Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
Written appeals resolved in 15 calendar days after receipt of participant’s request for review in the case of pre-service claims.
.08%
•
0. 02%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: 1 claim out of the 2 pre-service appeals was missed due to the appeal being for medical necessity determination; a delayed response from the provider cause
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 22
the target to be missed.
Written appeals resolved in 45 calendar days after receipt of participant’s request for review in the case of post-service claims.
.08%
•
0.02%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: The system issue was identified and resolved.
Contractor will deliver its monthly reports to the ADOA within 30 calendar days from the end of the month.
0.06%
•
0.02%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: Follow up communication has been provided to the reporting unit to meet all future reporting targets.
97% of all fully documented claims received will be completely processed within 14 calendar days after they are received. Will be calculated by counting the number of days from the day the claim is received.
0.18%
•
0.06%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Cigna identified system issues that caused a backlog for claim processing. The system issues where resolved and the target was met for the remaining reporting period.
Network Management- Change to Primary Provider Count.
Contractor will provide a detailed provider report which identifies providers by TIN number
0%
•
.0%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: Follow up communication has been provided to the reporting unit to meet all future reporting targets.
Network Management- Primary Care Provider Count Turnover. Contractor will provide a detailed provider report which identifies providers by TIN number.
0%
•
.0%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: Follow up communication has been provided to the reporting unit to meet all future reporting targets.
C. Cigna (Claims Administrator) continued
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 23
D. Aetna (Claims Administrator) – penalties to date of $2,266.76, equaling .67% of the vendor’s administrative fee.
MEASURE
Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
First Call Resolution 90% or greater
.19%
•
.33%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: Aetna completed additional training to ensure proper handling of calls when a transfer is necessary.
97% Telephone Call Quality
.19%
•
.33%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: Aetna provided re-education to ensure customer service representatives follow internal processes.
E. ASI (Flexible Spending) - penalties to date of $26.67, equaling .25% of the vendor’s fee at risk.
MEASURE
Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
100% of claims will be processed within five working days
.25%
•
0.25%: WHICH EQUALS 1 QUARTER MISSED OUT OF 1 QUARTERS MEASURED
•
Corrective Action: ASI has identified two issues which caused the target to be missed and has implemented the following action items:
o
ASIFlex is currently updating the website to include in the instructions regarding faxed claims that participants should fax claim forms separately and only for their account.
o
ASIFlex has modified our practice of contacting the
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 24
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 25
F. American Health Holding - penalties to date of $1,005.30, equaling 1.03% of the vendor’s fee at risk.
H. Successfully Met Performance Guarantees
Table 11: Successful Performance Guarantees
Vendor
At risk
Guarantees Met
UHC
18.55% Total Administration Fee
25% Medical Management Fee
Customer Service (met 17 out of 18 targets), Appeals, Claims Adjudication, Administration, Account Management Meeting, Network Management, Medical Management, Case Management, Disease Management, Nurse Line, Account Management Survey,& Member Satisfaction Survey.
AmeriBen
15% Total Administration Fee
Customer Service, Appeals (met 11 out of 12 measures), Claims Adjudication, Administration, Account Management Meeting, Reports (met 7 out of 8 measures), Finance Accounting, Member Satisfaction Survey, & Network Management (met 4 out of 6 measures).
employer first regarding enrollment issues. ASIFlex now initially denies the claim for not enrolled and then contact is made with the employer.
E. ASI (Flexible Spending) continued
MEASURE
Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
95% of identified members will be screened within 7 business days
.62%
•
0.62%: WHICH EQUALS 1 QUARTER MISSED OUT OF 1 QUARTERS MEASURED
•
Corrective Action: AHH updated reporting requirement to insure compliance with measurement.
95% of cases are identified and appropriately triaged
.41%
•
0.41%: WHICH EQUALS 1 QUARTER MISSED OUT OF 1 QUARTERS MEASURED
•
Corrective Action: AHH updated reporting requirement to insure compliance with measurement. Cigna
6.5% Total Administration Fee
6.75% Medical Management Fee
Customer Service (met 13 out of 14 targets), Appeals (met 10 out of 12 targets), Claims Adjudication (met 66 out of 72 targets), Account Management Meeting, Administration, Reports (met 2 out of 3 targets), Finance Accounting, Network Management (met 4 out of 6 targets), Medical Management, Case Management, Disease Management, Member Satisfaction Survey, & Nurse Line.
Aetna
4.5% Total Administration Fee
4% Medical Management
Customer Service (met 19 out of 21 targets), Appeals, Claims Adjudication, Administration, Account Management Meeting, Annual Member Satisfaction Survey, Reports, Network Management, Medical Management HIPPA Compliance, Case Management, & Nurse Line.
American Health Holding
Total Administration Fee 1.95%
Case Management Fee 1.87%
Disease Management Fee 1.25%
Nurse line Fee 1.25%
Utilization Management, Case Management, Disease Management, Reporting, Systems, Nurse & Other Call Center Activity.
MedImpact
$522,500.00 Total Fees at Risk
Data & Eligibility Requirements, Claims, Customer Services, Account Services, Reports, Network Access, Network Pharmacy Management, Mail Order Service, Retail Paper Claims Processing Time, Network Pharmacy POS Compliance.
Delta Dental
1.25% Total Administration Fee
Reporting, Network Management, Claims Administration, Appeals, Satisfaction, & Quality of Service and Responsiveness to Members.
TDA
1% Total Administration Fee
Reporting, Network Management, Appeals, Satisfaction, Quality of Service & Responsiveness to Members.
Hartford
10% Total Administration Fee
Report Timeliness, Quality of Service and Responsiveness to Members, Appeals/Grievance, Claims Administration, & Survey Customer Satisfaction.
Avesis
$77,250.00 Total Fees at Risk
Implementation, Reporting, Networking, Claims, Appeals, & Call.
ASI Flex
5% Total Administration Fee
Claims Turnaround (met 7 out of 8 targets), Claims Adjudication Financial Accuracy, Web Availability, & Phone Response Time.
H. Successfully Met Performance Guaranteescontinued
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 26
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 27
Audit Services
The Benefit Services Division (BSD) Audit Services Unit provides assurances that add value and improve the operations of the BSD. Audit Services performs systematic evaluations of contract compliance, operational controls, risk management, and the implementation of best practices to support BSD objectives.
During the reporting period BSD Audit Services completed various types of audits to ensure that the health plan’s vendors appropriately provided contracted services. The audit schedule for the plan year was developed using a combination of contract elements and risk analysis. Individual audit objectives were developed with the consideration of dollar value, complexity of operations, changes in personnel or operations, loss exposure, and previous audit results. Audits were completed, but were not limited to the following four functional areas:
Functional Area
Audit Methodology
Vendor operating transactions
Statement on Auditing Standard No. 70 (“SAS 70”)
Vendor internal operating standards
Quality Management Review (“QMR”)
Vendor execution of benefit design
Plan Allowance/Exclusion Audit (“A & E”)
ADOA Accuracy of shared data
Dependent eligibility audit
All of the health plans contracted vendors that pay claims are required to provide a third-party assessed operational audit (SAS 70) annually. SAS 70 audits evaluate operational process of the vendor’s transactions and determine if identified deficiencies were appropriately addressed. Audit services reviewed the SAS 70 reports provided by each of the vendor’s external auditors. There were no instances of significant operating failure noted and no corrective action was required.
QMRs ensure the vendor’s internal audit teams were effectively measuring operating standards, identifying and correcting errors and providing sufficient training for claims processing, customer service, and clinical reviews. QMR results indicated that vendors were either meeting or exceeding internal standards and that claims processors were appropriately trained.
A & E Audits ensure that the vendor’s systems were set up correctly to service the health plan’s benefit design. A & E Audit findings for the plan year, indicated that plan limitations and restrictions were processed accurately with few exceptions and members received the benefits allowed to them as defined in the plan description.
A dependant eligibility audit was also performed on the health plan’s membership. The results of the eligibility audit indicated that only eligible individuals were enrolled in the plan and receiving benefits. Additionally, dependent eligibility is effectively monitored to minimize the risk of claims paid on behalf of ineligible dependents.
In addition to the audits, reviews and evaluations list above, Audit Services performed operational standards testing related to vendor performance guarantees, quality management standards, and reporting structure for each of the newly implemented medical vendors. Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 28
Glossary of Terms
Active member – an employee, other than one excluded by the Arizona Administrative Code, who works for the State of Arizona or a State University and is enrolled in one of the health plan options offered by the State. Also referred to as “Actives.”
Administrative fees – fees paid to third-party vendors for plan administration, network rental, transplant network access fees, shared savings for negotiated discounted rates with other providers, COBRA administration, direct pay billing, additional reporting billing, State fees (MA and NY), and bank reconciliation fees.
Case management – a collaborative process that facilitates recommended treatment plans to ensure that appropriate medical care is provided to disabled, ill or injured individuals.
Claim – a provider’s demand upon the payer for payment for medical services or products.
Claim appeal – a request for a review of the denial of coverage for a specific medical procedure contemplated or performed.
COBRA Consolidated Omnibus Budget Reconciliation Act of 1985 – a federal law that requires an employer to allow eligible employees, retirees, and their dependents to continue their health coverage after they have terminated their employment or are no longer eligible for the health plan - COBRA enrollees must pay the total contribution, in addition to an administrative fee of 2%.
Contribution strategy – a premium structure that includes both the employer’s financial contribution and the employee’s financial contribution towards the total plan cost.
Copayment – a form of medical cost sharing in the health plan that requires the member to pay a fixed dollar amount for a medical service or prescription.
Deductible – a fixed dollar amount during the plan year that a member pays before the health plan starts to make payments for covered medical services.
Dependent – an unmarried child of the employee or spouse who meets the conditions established by the relevant plan description.
Disease management – a comprehensive, ongoing, and coordinated approach to achieving desired outcomes for a population of patients - These outcomes include improving members’ clinical condition and quality of life as well as reducing unnecessary healthcare costs. These objectives require rigorous, protocol-based, clinical management in conjunction with intensive patient education, coaching, and monitoring.
Eligibility appeal – a request for a review of the denial of coverage relating to a claimant’s entitlement to benefits under a plan. Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 29
Employee – a person, other than one excluded by the Arizona Administrative Code, who works for the State of Arizona or a State University.
Exclusive Provider Organization (EPO) – an exclusive provider organization or network - Enrollees are limited to use only those providers on the exclusive list. Any exceptions require prior authorization.
Flexible spending account (FSA) – an account that can be set up through the State’s Benefit Options program – An FSA allows an employee to set aside a portion of his/her earnings to pay for qualified medical and dependent care expenses. Money deducted from an employee's pay into an FSA is not subject to payroll taxes.
Formulary – a list of preferred medications covered by the health plan - The list contains generic and name brand drugs. The most cost-effective name brand drugs are placed in the “preferred” category and all other name brand drugs are placed in the “non-preferred” category.
Fully-Insured – an insurance model wherein Benefit Options collects premiums and transfers the premiums to commercial insurers who take the risk of revenue to expense.
Health Savings Account Option (HSAO) – An account that allows individuals to pay for current health expenses and save for future health expenses on a tax-free basis. Only certain plans are HSA-eligible.
Integrated – health plan operations that are provided by one entity - These operations include: claims processing and payment, a network of medical providers, utilization management, case management and disease management services.
Medicare – the federal health insurance program provided to those who are age 65 and older or those with disabilities who are eligible for Social Security benefits - Medicare has four parts: Part A, which covers hospitalization; Part B, which covers physicians and medical providers; Part C, which expands the availability of managed care arrangements for Medicare recipients; and, Part D, which provides a prescription drug benefit. Retirees signing up for ADOA insurance should enroll in Parts A and B, but not C or D.
Member – a health plan participant - This individual can be an employee, retiree, spouse or dependent.
Network – an organization that contracts with providers (hospitals, physicians, and other health care professionals) to provide health care services - Contract terms include agreed upon fee arrangements for services and performance standards.
Non-integrated – health plan operations that are provided by multiple entities - These operations include claims processing and payments, a network of medical providers, and disease management services.
Payer – the entity responsible for paying a claim. Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 30
Pharmacy benefit manager – an organization that provides a pharmacy network, processes and pays for all pharmacy claims, and negotiates discounts on medicines directly from the pharmaceutical manufacturers - These discounts are passed to the employer payer in the form of rebates and reduced costs in the formulary.
Plan year – the period October 1 through September 30.
Preferred Provider Organization (PPO) – an organization that offers a broad selection of providers and the ability to choose a non-PPO provider as well - This non-PPO provider requires greater copay from the enrollee and a deductible to be paid.
Premium – agreed upon fees paid for medical insurance coverage - Premiums are paid by both the employer and the health plan member.
Retiree – a former State or State University employee, officer or elected official who is retired under a State-sponsored retirement plan - For analytical purposes, this term encompasses both actual retirees and their dependents.
Self-funded – insurance program wherein Benefit Options collects premiums, pays claims, and assumes the risk of revenues to expenses.
Self-insured – a plan that is funded by the employer who is financially responsible for all medical claims and administrative expenses.
Spouse – one legally married—as defined by the Arizona Revised Statutes—to an employee or a retiree.
Stop-loss – a form of insurance for self-insured employers that limits the amount the employer as primary insurer will pay for medical expenses.
Subscriber – employee, officer, elected official or retiree who is eligible and enrolls in the health plan.
Third party administrator – an organization that handles all administrative functions of a health plan, including: processing and paying medical claims, compiling and producing management reports, and providing customer service.
Utilization management – a process whereby an insurer evaluates the quantity (duration) and quality (level) of the delivery of medical services.
Utilization review – a process whereby an insurer evaluates the appropriateness, necessity, and cost of services provided.
Utilizer – a member who receives a specific service.Appendix A
BEGINNING CASH PER AFIS151,586,438.05$ REVENUE195,898,775.31$ EXPENDITURES158,322,242.20$ VENDORADMIN FEESPERF PENALTIESHARRINGTON396.25$ -$ AHH UR/UM249,053.85$ -$ AETNA379,601.42$ -$ CIGNA840,310.72$ -$ UHC2,885,990.23$ -$ AMERIBEN795,550.59$ -$ WHI-$ 5,000.00$ MEDIMPACT310,296.75$ -$ OTHER FEES**52,890.51$ ATTORNEY GENERAL 178.50$ NET ADMIN FEES^5,514,268.82$ 5,000.00$ 5,509,268.82$ MEDICAL CLAIMSRECOVERIES*HARRINGTON1,064.79$ 643,448.15$ AETNA4,356,826.62$ -$ CIGNA7,817,286.05$ -$ UHC74,569,190.18$ -$ AMERIBEN21,336,207.83$ 130,330.27$ WHI-$ 448,682.62$ MEDIMPACT29,518,574.39$ 1,624,323.15$ ERRP REIMBURSEMENT2,456,920.42$ RDS SUBSIDY-$ OTHER WELLNESS14,619.00$ NET MEDICAL CLAIMS137,613,768.86$ 5,303,704.61$ 132,310,064.25$ STOP LOSS PREMCLAIM REIMBSYMETRA3,916,669.00$ 3,168,251.89$ 748,417.11$ SELF INSURED EXPENDITURES138,567,750.18$ FULL SVC PREMBCBS8,569,657.03$ OTHER (COLONIAL)41.28$ TOTAL FS INS PREMS^8,569,698.31$ -$ 8,569,698.31$ DENTAL PREMPERF PENALTIESDELTA$9,130,516.14-$ TDA$946,324.22-$ NET DENTAL PREM10,076,840.36$ -$ 10,076,840.36$ HITF APPROP EXP1,107,953.35$ 1,107,953.35$ TOTAL EXPENDITURES166,799,198.70$ TOTAL RECOVERIES*8,476,956.50$ NET EXPENDITURES158,322,242.20$ ENDING CASH BALANCE PER AFIS189,162,971.16$ NON-CONTRACT EXP224,966.03TOTAL CONTRACTS VALUE166,574,232.67$ Table A: 3015 FUND PLAN YEAR 2009-2010 ADDENDUM 10/1/2010 - 12/31/2010
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 31
The HITF Fund-3015 established under A.R.S. 38-654-A is used to pay medical claims, dental premiums, and administrative and operating costs of the Wellness Program and the Benefits Services Division.
*Recoveries include Medicare Part D Retiree Drug Subsidy reimbursement, prescription drug rebates, stop loss claim reimbursements, overpayment recoveries (including stop payments and voids), subrogation recoveries, etc.
**Other fees include HSA Administration, NYHCR, MA, and legal fees.
^Vendor administrative fees and fully insured premiums are paid 55 days in arrears per contract.
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 32
Fund 3035 is established under A.R.S. 38-651.05. to pay premiums for other insurance products offered to State employees including Vision, Flexible Spending, Supplemental and Dependent Life, Short Term Disability, Non-ASRS Long Term Disability, and Basic Life insurance.
BEGINNING CASH PER AFIS4,697,559.87$ REVENUE7,526,502.26$ VENDORINSURANCEAMOUNTHARTFORDBASIC LIFE(597,717.31)$ SUPP LIFE2,883,848.62$ DEP LIFE673,778.17$ STD1,956,956.86$ LTD772,247.83$ TOTAL HARTFORD5,689,114.17$ OTHERBASIC LIFE-$ STD(23.65)$ LTD890.94$ TOTAL OTHER867.29$ AVESISVISION1,220,951.53$ ASIAMRA430,825.21$ DCRA184,744.06$ TOTAL FLEX SPENDING615,569.27$ PAYROLL CLEARING(0.00)$ TOTAL REVENUE7,526,502.26$ EXPENDITURES7,940,041.28$ VENDORINSURANCEAMOUNTHARTFORDBASIC LIFE341,194.45$ SUPP LIFE2,558,472.55$ DEP LIFE591,186.72$ STD1,705,761.74$ LTD658,627.04$ TOTAL HARTFORD5,855,242.50$ OTHERBASIC LIFE5,000.00$ STD-$ LTD-$ TOTAL OTHER5,000.00$ AVESISVISION1,076,448.88$ ASIAMRA780,768.22$ DCRA205,196.68$ ADMIN FEES17,385.00$ TOTAL FLEX SPENDING1,003,349.90$ GAO AFIS COST-$ TOTAL EXPENDITURES7,940,041.28$ ENDING CASH BALANCE PER AFIS4,284,020.85$ Table B: 3035 FUND PLAN YEAR 20009-2010 ADDENDUM 10/1/2010 - 12/31/2010
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 33
Benefit Options
Arizona Department of Administration,
Benefit Services Division
100 N. 15th Avenue, Suite 103
Phoenix, Arizona 85007
Telephone: 602-542-5008
Fax: 602-542-4744
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 34

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State of Arizona
Arizona Department of Administration
Benefit Services Division
Annual Report
Benefit Options Addendum
October 1, 2010 through December 31, 2010
Scott A. Smith
Director
Arizona Department of Administration
Janice K. Brewer
Governor FOREWORD
Benefit Options is the program name for the various benefits offered to State of Arizona employees and retirees. This report was prepared to give a broad overview of Benefit Options.
The information provided in the report was gathered from contracted vendors participating in the Benefit Options insurance programs. This report was compiled to meet the requirements of A.R.S. §38-652 (G) and A.R.S. §38-658 (B).
The data shown is presented for the period October 1, 2010 through December 31, 2010.
This report is an addendum to the Annual Report published for the October 1, 2009 through September 30, 2010. This report reflects data required to be reported as a result of the change in the plan year. The plan year now begins January 1 of each calendar year.
Any questions relating to the contents of this report should be addressed to:
Benefit Options
Arizona Department of Administration,
Benefit Services Division
100 N. 15th Avenue, Suite 103
Phoenix, Arizona 85007
Telephone: 602-542-5008
Fax: 602-542-4744 ContentsReport Background1Executive Summary2Health Insurance Trust Fund Summary4Enrollment in Benefit Options Medical Plans5Expenses vs. Premiums for Active and Retired Members7Expenses for Benefit Options Self-Funded Plans8Medical Expenses Associated with Medical Diagnoses9Hospital Care10Emergency Room Visits12Urgent Care Visits12Physician Visits12Generic and Name-Brand Prescription Use14Prescription Use by Therapeutic Class14Prescription Use by Type of Drug15Annual Prescription Use16Annual Pharmacy Expenses by Age17Benefit Options Dental Plans18Dental Rates19Life, Disability, Vision Insurance and Flexible Spending Accounts Premiums20Health Insurance Vendor Performance Standards21Audit Services27Glossary of Terms28Appendix A - Plan Year Cash Flow Reconciliation31Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 1
Report Background
This document has been assembled to report the financial status of the Employee Health Insurance Trust Fund pursuant to A.R.S. §38-652 (G), which reads:
G. The department of administration shall annually report the financial status of the trust account to officers and employees who have paid premiums under one of the insurance plans from which monies were received for deposit in the trust account since the inception of the health and accident coverage program or since submission of the last such report, whichever is later.
The Benefit Options program is accounted for in two different funds. The Special Employee Health Fund, also known as fund 3015 or the Health Insurance Trust Fund (HITF), encompasses the medical and dental programs and the appropriated expenditures for ADOA Benefit Services operations. The ERE/Benefits Administration Fund, fund 3035, is primarily a “pass through” fund for other benefits including vision, disability insurance, life insurance and flexible spending accounts.
The benefits offered through the program fall into one of two types — self-funded and fully-insured. The health benefit plan is self-funded; whereas the dental plans, vision plan, disability insurance, and life insurance plans are fully insured.
The State’s self-funded medical plan began on October 1, 2004, and consists of a carved out pharmacy plan with two options for the medical plan, integrated or non-integrated. The integrated option combines the functions of claims review and payment, network access, and utilization review and utilization management (URUM) which includes case management and disease management. The non-integrated option is similar, but the URUM function is carved out to a separate contract.
Schedules of premiums received; incurred and paid medical/drug claims; expenses related to the medical and dental plans; and distribution by enrollment are included within this document as accounted for in fund 3015. A summary of premiums collected and paid for life insurance, vision insurance and flexible spending accounts has also been included for fund 3035. The Cash Flow Reconciliation charts for the two funds can be found in Appendix A. The difference in the values presented in Appendix A and the Health Insurance Trust Fund (HITF) Summary on page 4 is a result of timing difference between when premiums and/or services are incurred and when they are paid. Appendix A was prepared on a cash basis, where as, the HITF Summary was prepared on an accrued and paid basis.
All data provided herein is for the period October 1, 2010 through December 31, 2010. Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 2
Executive Summary
The passing of Health Care Reform by the Federal Government initiated a review of the plan year cycle. It was determined that the plan year should be moved to a calendar year for tax reporting purposes effective January 1, 2011. In order to effect a smooth transition to the new plan year, a mini-plan year was offered from October 1, 2010 through December 31, 2010, with no change in premium structure or contribution strategy from the ending 2009-2010 plan year. Due to this uncommon event and its unique characteristics, there are no similar reporting periods to which a comparison may be performed. Therefore, there is no comparative data presented in this report.
During the reporting period, October 1, 2010 through December 31, 2010, the Benefit Services Division (BSD) Health Plan offered a comprehensive insurance package to over 128,000 members consisting of active State employees, University staff, retirees, and their qualified dependents. The benefit options include; medical, pharmaceutical, dental, flexible spending, vision, life, and disability insurance.
To ensure the efficiency and effectiveness of the State Health Plan, BSD Audit Services maintained a multi-directional audit plan which includes; contract compliance auditing, quality management reviews, process improvement, and plan design evaluation. Audits scheduled and completed this plan year consist of: dependent eligibility, vendor operating transactions, vendor internal operating standards, and vendor execution of benefit design. The audit plan has been strategically developed to identify potential loss and facilitate corrective action, in continuing efforts to improve plan performance and cost effectiveness.
For the reporting period, the total premiums expected were $193,928,037 with expected total expenses for the plan of $191,367,466, resulting in an expected net operational gain of $2,560,570.
The 2009-2010 contribution strategy for medical resulted in employees paying 10.61% of the average monthly total premium, while the State paid the remaining 89.39%. However, the contribution strategy for dental resulted in employees paying 84.21% of the average monthly total premium, while the State paid the remaining 15.79%. Retirees are fully responsible for payment of their premiums, but typically receive a subsidy through the respective retirement system to offset a portion of the cost. COBRA is offered to termed employees at 102% of the total premium. However, if qualified under the American Recovery and Reinvestment Act (ARRA), a COBRA member would pay only 35% of the total COBRA premium with the remaining 65% COBRA Premium Assistance portion to be collected through a reduction of employer paid payroll taxes.
The analysis of expenses for the reporting period indicated the average cost to insure each member was $5,554. However, when analyzed by type of subscriber; the active members average cost was $5,360 compared to the average retiree cost of $7,821. This difference in average cost between active and retired members is a common trend. There is a direct relationship between the age of an insured member and their cost for health care. Senior members usually require an increased amount of medical care, including additional pharmaceuticals, to maintain their quality of life. Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 3
Medical claims expenses accounted for $104,881,454 of the total cost the health plan during the reporting period. When analyzed by cost, the five leading diagnosis categories are: musculoskeletal system (muscles and joints), circulatory system (heart), neoplasm (cancers), genitourinary system (kidneys and reproductive organs), and digestive system. Musculoskeletal system was the leading category with $13,143,046 or 12.53% of total claims paid.
Examination of hospital care reveals that inpatient care represents a significant portion of the total medical expenses: 36.63% and 31.39% for active and retired members respectively. Analysis by the type of medical care visit reveals there were 157 emergency room, 135 urgent care, and 3,960 physician visits per 1,000 members covered under the self-insured plan; which indicates members are seeking the care of a physician or specialist for the majority of their medical needs.
The cost of prescription drug claims for the period totaled $27,635,461 and a reported 386,030 prescriptions were filled. The top five most expensive drugs classes are described as maintenance drugs used to control and prevent chronic diseases. Diabetes drugs lead the list with 2.59 million dollars or 9.21% of total pharmacy costs. Other leading categories were cardiovascular disease, asthma, behavioral health, and inflammatory disease. The most prescribed drug according to total expense is Lipitor, typically prescribed for treating and preventing high cholesterol.
Retirees on the State health plan filled an average of 14.2 prescriptions for the period, while active members averaged 8.2. Similar to medical cost per member, the pharmaceutical expense per member increases as the members age increases. Analysis indicates that the 40-64 age group annual prescription drug cost is $877 per member compared to the 65+ age group cost of $1,448 per member. As a result the smaller population of insured retirees attributes the majority of prescription expenses.
In addition to managing the volume statistics and expenses of the Program, the State manages performance measures with specific financial guarantees. These financial guarantees are tied to the contracted performance of the vendors providing services. If a vendor fails to meet any of the measures, a percentage of the annual administrative fee is withheld by ADOA as performance penalties. During the October 1, 2010 through December 31, 2011, ADOA collected penalties totaling $5,000 for the previous Plan Year. An assessment of vendor performance for the October 1, 2010 through December 31, 2010 period is provided in the Health Insurance Vendor Performance Standards section of this report.
In review, the October 1, 2010 through December 31, 2010, period continued to demonstrate a balance of expenses and premiums that allowed the State to offer members comprehensive and affordable insurance coverage. The State effectively controlled the rise in health care costs through quality benefit design, administrative oversight, strategic planning and auditing, and effective contract management. Detailed evidence of the State’s Health Plan accomplishment can be reviewed herein. Health Insurance Trust Fund Summary
Table 1 provides a summary of receipts, expenses, and enrollment incurred during the October 1, 2010 through December 31, 2010 Mini-Plan Year and paid through March 2011.
ADOA Benefit Options refers to the self-funded medical program and includes Aetna, Blue Cross Blue Shield of Arizona administered by AmeriBen, CIGNA, and United Healthcare networks. BCBS (NAU), and all dental plans are fully-insured.
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 4
State and University employees and retirees choose coverage from one of the self-funded networks. However, Blue Cross Blue Shield is a fully-insured option available only to NAU employees and NAU retirees.
The Medicare Part D Subsidy is available to employers who provide a qualified pharmacy plan to Medicare-eligible retirees. Rebates & Recoveries consist of rebates paid by drug manufacturers, performance penalties assessed to contractors for not achieving performance guarantees, overpayment recoveries and stop-loss reinsurance payments. Reserve (IBNR) is the amount of money that must be held in reserve for the purpose of paying claims that have been incurred but have not been reported. Stop-loss is a “catastrophic claim” reinsurance program that covers individual medical/drug plan expenses over $500,000 with a lifetime maximum of $2 million.
Table 1: Health Insurance Trust Fund SummaryOctober 1, 2010 -December 31, 2010 Receipts (accrual basis)ADOA Benefit Options174,545,324 BCBS (NAU)8,462,079 Dental10,920,634 Total193,928,037 ExpensesMedical Claims (accrual basis)104,881,454 Drug Claims (accrual basis)27,635,461 ERRP Reimbursement(2,456,920) Medicare Part D Subsidy*- Rebates & Recoveries(2,851,784) Reserves for future benefits36,130,740 BCBS Payments8,569,657 Administration Fees7,682,583 Stop-Loss Premiums839,462 Appropriated Expenses1,107,953 Dental Costs10,086,030 Total191,624,636 Difference2,303,401 EnrollmentSubscribers61,033 Members128,983
*No Medicare Part D subsidy was received during the reporting period. Enrollment in Benefit Options Medical Plans
The Benefit Options group medical plan is available to all:
•
eligible State employees and University staff, officers, and elected officials
•
State retirees receiving pension benefits through any of the State retirement systems
•
State employees or University staff accepted for long-term disability benefits
•
employees of participating political subdivisions
��
State employees or University staff eligible for COBRA benefits
The table below shows how enrollment was distributed between networks and between active, retired, and university members.
NetworkPlan TypeSubscribersMembers *AETNAActiveEPO11602622RetireeEPO284360UniversityEPO11642097COBRAEPO2334ActivePPO90152RetireePPO6782UniversityPPO145240COBRAPPO0ActiveHSAO121218RetireeHSAO--UniversityHSAO171316COBRAHSAO45AmeriBenActiveEPO557313789RetireeEPO11451525UniversityEPO16163352COBRAEPO6288ActivePPO222398RetieePPO202245UniversityPPO281531COBRAPPO66CIGNAActiveEPO28236740RetireeEPO701914UniversityEPO11742331COBRAEPO1923Table 2: Average Monthly EnrollmentOctober 1, 2010 - December 31, 2010 Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 5
NetworkPlan TypeSubscribersMembers *UnitedHealthcareActiveEPO2231152289RetireeEPO49556464UniversityEPO1201726427COBRAEPO288382ActivePPO6091102RetireePPO171222UnivesityPPO7481421COBRAPPO1722Blue Cross Blue ShieldNAU onlyPPO28644585Total61033128983* NAU and COBRA dependent is an estimated number based onOctober 1, 2010 - December 31, 2010 Continuation Table 2: Average Monthly Enrollment
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 6
Expenses vs. Premiums for Active and Retired Members
The figure below shows how the average monthly premiums compared to the average monthly cost for active and retired members. $-$100.00$200.00$300.00$400.00$500.00$600.00$700.00Active PremiumActive ExpenseRetiree PremiumRetiree ExpenseFigure 1: Average Monthly Premiums and Expenses per MemberSubscriber PaidState PaidDrugsMedicalAdministrative 10/01/2010 - 12/31/201010/01/2010 - 12/31/2010
ADOA developed a contribution strategy that provided affordable health insurance to all State and University employees. The EPO plan was offered to employees for single coverage, employee plus adult, employee plus child, and family coverage at the cost of $39, $97, $79 and $178. PPO monthly premiums were determined from actual experience and the true cost of the coverage.
The 2009-2010 contribution strategy for medical resulted in employees paying 10.61% of the average monthly total premium, while the State paid the remaining 89.39%. The contribution strategy for dental resulted in employees paying 84.21% of the average monthly total premium, while the State paid the remaining 15.79%.
Pursuant to A.R.S. §38.651.01(B.), retiree and active medical expenses shall be grouped together to “obtain health and accident coverage at favorable rates.” This requirement results in retiree premium rates lower than what their experience would otherwise dictate.
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 7
Expenses for Benefit Options Self-Funded Plans
The tables below show the distribution of the self-funded expenses. Table 3 shows the expenses distributed between active/retiree and EPO/PPO members. The average annual cost to insure each type of subscriber/member is also provided.
Table 3: Self-funded expenses by active, retiree, EPO, and PPO subscribers and members*ExpensesOverallActiveRetireeEPOPPOHSAOMedical Claims (accrual basis)104,881,454 95,499,699 9,381,755 99,357,245 5,443,057 81,152 Drug Claims (accrual basis)27,635,461 20,692,552 6,942,908 25,566,670 2,039,636 29,154 ERRP Reimbursement(2,456,920)(2,456,920)(2,300,407)(156,513)Medicare Part D Subsidy+0000Rebates & Recoveries(2,828,390)(2,479,963) (348,427) (2,666,328) (159,708) (2,354) Reserve (IBNR)36,130,740 31,679,820 4,450,920 34,060,508 2,040,157 30,075 Administration Fees7,425,4146,464,798960,6167,061,141326,48937,785 Stop-Loss Premiums839,462730,862108,600798,28036,9104,272 Appropriated Expenses1,107,953964,619 143,3341,053,60048,7165,638 Total$172,735,174153,552,38719,182,787162,930,7099,618,744185,721 Enrollment in self-funded plansSubscribers58,170 50,644 7,525 55,316 2,558 296 Members124,398 114,587 9,811 119,437 4,422 540 Annualized costPer subscriber$11,878 12,128 10,196 11,782 15,043 2,510 Per member$5,554 5,360 7,821 5,457 8,701 1,377
*The data is for the incurred period October 1, 2010 through December 31, 2010.
+No Medicare Part D subsidy was received during the reporting period.
Table 4 below shows the distribution of expenses by benefit plan.
Table 4: Self-funded Expenses by Active, Retiree, EPO, and PPO Subscribers and Members*Expenses (in dollars) OverallActive/ EPOActive/ PPOActive/HSAORetiree/ EPORetiree/ PPOMedical Claims (accrual basis)104,881,45490,591,874 4,826,672 81,152 8,765,371 616,385 Drug Claims (accrual basis)27,635,46119,105,914 1,557,484 29,154 6,460,756 482,152 ERRP Reimbursement(2,456,920)(2,300,407)(156,512.96) Medicare Part D Subsidy+000Rebates & Recoveries(2,828,390)(2,341,347) (136,261) (2,354) (324,981) (23,447) Reserve (IBNR)36,130,74029,909,104 1,740,640 30,075 4,151,404 299,516 Administration Fees7,425,4146,156,691270,32237,785904,45056,166Stop-Loss Premiums839,462696,03030,5614,272102,2506,350Appropriated Expenses1,107,953918,646 40,335 5,638 134,954 8,381 Total$172,735,174145,036,9128,329,754185,72117,893,7971,288,990 Enrollment in self-funded plansSubscribers58,170 48,231 2,118 296 7,085 440 Members124,398 110,174 3,873 540 9,263 549 Annualized costPer subscriber$11,878 12,029 15,734 2,510 10,102 11,718 Per member$5,554 5,266 8,603 1,377 7,727 9,397
*The data is for the incurred period October 1, 2010 through December 31, 2010.
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 8
Medical Expenses Associated with Medical Diagnoses
The table below shows how medical expenses were distributed among different diagnoses. More dollars are spent on treating conditions related to the musculoskeletal system than on any other type of disorder.
Table 5: Medical expenses by diagnosis –actives & retireesActivesRetireesAll membersDiagnosis% of Total% of Total% of TotalMusculoskeletal System12.44%13.46%12.53%Health Status (lab tests, etc.)10.66%9.27%10.54%Ill-defined19.52%7.81%9.37%Circulatory System9.25%10.49%9.36%Neoplasm (tumors)8.97%12.68%9.30%Genitourinary System7.67%10.10%7.89%Digestive System7.11%8.17%7.20%Injury/Poisoning7.25%6.59%7.19%Nervous System5.06%8.90%5.41%Respiratory System5.12%3.43%4.97%Endocrine4.30%3.63%4.24%Pregnancy/Childbirth Complications4.14%0.01%3.77%Mental Health2.51%1.11%2.39%Infectious/Parasitic2.19%1.05%2.09%Skin and Subcutaneous Tissue1.68%2.14%1.72%Blood and Blood Forming Organs1.09%1.00%1.09%Congenital Anomalies0.74%0.16%0.69%Conditions in the Perinatal Period0.30%0.00%0.27%External Causes of Injury/Poisoning0.00%0.00%0.00%Grand Total100.00%100.00%100.00%October 1, 2010 - December 31, 2010
Note: Some statistics may vary slightly from previous annual reports due to the late receipt of program data following the completion of the previous annual report. In no case does the variation represent a substantive change in trend or comparative values.
1The ill-defined category is a technical term including symptoms, laboratory results and disorders which cannot be categorized elsewhere. Examples of ill-defined diagnoses are: adult convulsions not related to epilepsy, and laboratory analysis of blood with findings not related to cellular abnormality.
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 9
Hospital Care
Inpatient hospital care represents a significant portion of total medical expenses: 36.63% and 31.39% for active and retired members, respectively. The figures below show how active/retired members and EPO/PPO/HSAO members’ hospital admissions compared based on the number of admissions and the average length of stay. Active 59.8 Retiree 189.2 EPO65.9 PPO72.2 HSAO 44.0 -20.040.060.080.0100.0120.0140.0AdmissionsOctober 1, 2010 - December 31, 2010Figure 2: Admissions per 1,000 Members Active 3.7 Retiree 6.2 EPO 4.2 PPO 3.6 HSAO 6.9 -1.02.03.04.05.06.07.0October 1, 2010 - December 31, 2010Figure 3: Average Length of Stay
Note: Mental health, substance abuse, and maternity admissions are included. Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 10
Hospital Care (continued)
The figures below show how active/retired members and EPO/PPO/HSAO members compared statistically in collective number of hospital days and average cost per admission. As a group, retirees spent 4 times as many days in the hospital as active members. Also, PPO members spent about the same days in the hospital as EPO members. On average, PPO members cost per admission was $3,685 higher than EPO members. Active 224.0 Retiree 858.4 EPO274.3 PPO261.5 HSAO304.0 -100.0200.0300.0400.0500.0600.0700.0800.0900.0October 1, 2010 - December 31, 2010Figure 4: Days per 1,000 MembersActive $13,544Retiree $14,627EPO $13,806PPO $17,491HSAO $21,563$0$5,000$10,000$15,000$20,000$25,000October 1, 2010 - December 31, 2010Figure 5: Average Cost per Admission
Note: Mental health, substance abuse, and maternity admissions are included. Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 11
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 12
.
room visit was $1,288. These figures include
nal fees.
00
of the self-funded plan. The average plan cost per urgent care visit was
cian approximately 4.0
Emergency Room Visits During the reporting period, October 1, 2010 through December 31, 2010, there were approximately 157 emergency room visits per 1,000 members of the self-funded planThe average plan cost per emergency
fa
cility claims and professio
Urgent Care Visits During the reporting period, there were approximately 135 urgent care visits per 1,0members
$
90.00.
Physician Visits During the reporting period, there were approximately 3,960 physician visits per 1,000 members (or each member of the self-funded plan visited a physi
tim
es). The average plan cost per office visit cost was $94.88.
F
igure 6 indicates total active medical expense distribution by type of care. Figure 6: Active Employee Medical Expense by Place of ServiceOther, 0.13%Urgent Care Facility, 0.10%Ambulatory Surgical Center, 3.69%Emergency Room, 1.45%Outpatient Hospital, 26.77%Office, 26.24%Inpatient Hospital, 36.63%Ambulance, 0.31%Independent Laboratory, 2.28%Home Health, 2.40%Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 13
igure 7 indicates total retiree medical expense distribution by type of care
FFigure 7: Retiree Medical Expenses by Place of Service27.98%Independent Laboratory, 2.11%Ambulance, 0.18%Home Health, 3.52%Ambulatory Surgical Center, 4.10%Outpatient Hospital, 28.55%Other 1.31%Urgent Care Facility 0.05%Inpatient Hospital 31.39%Emergency Room 0.81%Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 14
eneric and Name-Brand Prescription Use
xpenses were distributed among generic,
referred, and non-preferred types of drugs.
rescription Use by Therapeutic Class
xpense. More dollars were spent on "Diabetes", than on any other therapeutic class.
G
The table below shows how total pharmacy e
pTable 6: Claim distribution for 3-tier formularyTotal PrescriptionsPercentTier 1 Generic ($10 copay)271,486 70.3%Tier 2-Preferred ($20 copay)87,666 22.7%Tier 3-Non-Preferred ($40 copay)26,878 7.0%October 1, 2010 - December 31, 2010
P
The table below shows the ten most utilized classes of drugs according to total
e
Table 7: Top therapeutic classes by total expenseTherapeutic classTotal CostPercentDiabetes$2,590,6699.21%Cardiovascular Disease - Lipid$2,559,8829.10%Asthma$2,033,3437.23%Behavioral Health - Other$1,986,6207.06%Behavioral Health - Antidepressants$1,782,6996.34%Inflammatory Disease$1,759,3146.25%Pain Management - Analgesics$1,337,0324.75%Upper Gastrointestinal Disorders - Ulcer$1,263,4434.49%Cardiovascular Disease - Hypertension$1,256,6224.47%Infectious Disease - Viral$1,157,9784.12%Total$17,727,60263.00%October 1, 2010 - December 31, 2010 Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 15
rescription Use by Type of Drug
Lipitor, a
holesterol controlling medication, is the leading prescription for the plan year.
Total $5,717,667 20.32%
P
The table below shows the ten most utilized drugs according to total expense.
c
Table 8: Top ten drugs by total expenseDrug NameTotal Gross CostPercentLipitor939,637 3.34%Humira644,614 2.29%Crestor608,878 2.16%Singulair555,555 1.97%Enbrel551,340 1.96%Advair diskus539,332 1.92%Plavix515,358 1.83%Cymbalta491,188 1.75%Actos441,690 1.57%Copaxone430,075 1.53%October 1, 2010 - December 31, 2010 Annual Prescription Use
The figure below compares the average number of prescriptions filled during the reporting period by active and retired members. Active 8.2 Retiree 14.2 -2.04.06.08.010.012.014.016.0October 1, 2010 - December 31, 2010Figure 8: Average Number of Prescriptions per Member
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 16
Annual Pharmacy Expenses by Age
The figure below shows how pharmacy expenses increase with age among plan members. 3244378771,44802004006008001000120014001600October 1, 2010 - December 31, 2010Figure 9: Pharmacy Expense per Utilizer (in dollars)0-18 yrs19-39 yrs40-64 yrs65+ yrs
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 17
Benefit Options Dental Plans
Prepaid Plan – Total Dental Administrators (TDA)
•
See a Participating Dental Provider (PDP) to provide and coordinate all dental care.
•
No annual deductible or maximums ($200.00 maximum reimbursement for non-contracted emergency services) under Total Dental Administrators.
•
No claim forms (except for emergency services).
Indemnity/PPO Plan – Delta Dental Premier
•
May see any dentist. Deductible and/or out-of-pocket payments apply.
•
A maximum benefit of $2,000 per person per plan year for dental services.
•
$1,500 per person lifetime for orthodontia.
•
May need to submit a claim form for eligible expenses to be paid.
•
Benefits may be based on reasonable and customary charges.
The following figures show how active employee and retiree dental enrollments were distributed among plans. Figure 10: Active Employee Dental EnrollmentDelta Dental 68%Total Dental 32%
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 18
Figure 11: Retiree Dental EnrollmentDelta Dental 82%Total Dental 18%
Dental Rates
The table below summarizes monthly dental rates for active and retired members.
Table 9: Summary of Monthly Dental RatesActive EmployeesEmployeeStateTotalEmployeeStateTotalEmployeeStateTotalDelta Dental$29.86$4.96$34.82$67.93$9.92$77.85$118.12$13.70$131.82Total Dental Admin.$5.00$4.96$9.96$9.00$9.92$18.92$14.00$13.70$27.70RetireesDelta Dental$34.82$77.85$131.82Total Dental Admin.$9.96$18.92$27.70 Single Coverage Family Coverage Single Coverage Family Coverage Employee +One CoverageEmployee +One Coverage
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 19
Life, Disability, Vision Insurance and Flexible Spending Accounts Premiums
The table below shows the amount of premiums collected and paid for life insurance, disability insurance, vision insurance and flexible spending accounts (FSA).
Table 10: Summary of Earned PremiumsVendorCollectedPaidHartford*^Basic Life(597,717.31)$ Supp Life2,883,848.62$ Dep Life673,778.17$ STD1,956,956.86$ LTD772,247.83$ Total5,689,114.17$ 5,855,242.50$ Other*Basic Life-$ STD(23.65)$ LTD890.94$ Total867.29$ 5,000.00$ Avesis* - Vision1,076,448.88$ ASI - FSA1,003,349.90$ Total7,940,041.28$ * Per contract, vendors paid 55 days in arrears.October 1, 2010 - December 31, 2010 ^ Collected amounts for Standard are residual collections due to timing of receipts from universities and members in leave without pay status.
Addendum - October 1, 2010 through December 31, 2010 Benefit Options 2009-2010 Annual Report
20
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 21
Health Insurance Vendor Performance Standard
Pursuant to A.R.S. § 38-658(B), the Arizona Department of Administration (ADOA) shall “...report to the Joint Legislative Budget Committee at least semiannually on the performance standards for health plans, including indemnity health insurance, hospital and medical service plans, dental plans and health maintenance organizations.”
Among the terms of the self-funded health insurance contracts are a number of ADOA-negotiated performance measures with specific financial guarantees tied to the contracted performance of the vendors providing various services for the health plans. If a vendor fails to meet any of the measures within the specified performance range, a percentage of the annual administrative fee is withheld by ADOA as performance penalties. This percentage is allocated among the more critical measures of the contract.
The following is a report of the performance penalties incurred by health plan vendors for their non-performance during the Mini Plan Year starting October 1, 2010 ending December 31, 2010. The details of each assessment are set forth in the exhibit specified by the same letter that identifies the vendor below.
A. UHC (Claims Administrator) – penalties to date of $3,187.47, equaling .03% of the vendor’s administrative fee.
MEASURE
Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
Average Speed to Answer <30 seconds
.50%
•
0.03%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: This metric was missed on the last day of the month when we had significant fluctuations in call volume and unanticipated staff out of the office. The site director of our dedicated team provided more security in coverage to prevent this from happening in the future. We confirmed this was isolated and not indicative of overall poor performance.
B. AmeriBen (Claims Administrator) – penalties to date of $449.27, equaling 0.06% of the vendor’s administrative fee.
MEASURE
Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
Written appeals resolved in 45 calendar days after
0.13%
•
0. 04%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED receipt of participant’s request for review in the case of post-service claims.
•
Corrective Action: The appeal target was missed due to contracting with a new external review vendor. The contract has been finalized so no further action is necessary.
Contractor will deliver its monthly reports to the ADOA within 30 calendar days from the end of the month.
0.06%
•
0. 02%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: Clerical error resulted in late transmission of this data to the ADOA as required. To prevent future late reporting, an internal team has been established to monitor and ensure all information is compiled in advance of the due date. A notification will be sent to the Account Manager upon completion of the reporting, the Account Manager will document transmission of reports to ADOA.
Contractor will provide a detailed provider report which identifies providers by TIN number.
0%
•
0%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: AmeriBen’s Internal Audit Specialist will confirm the transmission on or before the due date.
Contractor will provide a detailed provider report which identifies providers by TIN number.
0%
•
0%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: AmeriBen’s Internal Audit Specialist will confirm the transmission on or before the due date.
B. AmeriBen (Claims Administrator)continued
C. Cigna (Claims Administrator) – penalties to date of $643.22, equaling .14% of the vendor’s administrative fee.
MEASURE
Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
Written appeals resolved in 15 calendar days after receipt of participant’s request for review in the case of pre-service claims.
.08%
•
0. 02%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: 1 claim out of the 2 pre-service appeals was missed due to the appeal being for medical necessity determination; a delayed response from the provider cause
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 22
the target to be missed.
Written appeals resolved in 45 calendar days after receipt of participant’s request for review in the case of post-service claims.
.08%
•
0.02%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: The system issue was identified and resolved.
Contractor will deliver its monthly reports to the ADOA within 30 calendar days from the end of the month.
0.06%
•
0.02%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: Follow up communication has been provided to the reporting unit to meet all future reporting targets.
97% of all fully documented claims received will be completely processed within 14 calendar days after they are received. Will be calculated by counting the number of days from the day the claim is received.
0.18%
•
0.06%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Cigna identified system issues that caused a backlog for claim processing. The system issues where resolved and the target was met for the remaining reporting period.
Network Management- Change to Primary Provider Count.
Contractor will provide a detailed provider report which identifies providers by TIN number
0%
•
.0%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: Follow up communication has been provided to the reporting unit to meet all future reporting targets.
Network Management- Primary Care Provider Count Turnover. Contractor will provide a detailed provider report which identifies providers by TIN number.
0%
•
.0%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: Follow up communication has been provided to the reporting unit to meet all future reporting targets.
C. Cigna (Claims Administrator) continued
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 23
D. Aetna (Claims Administrator) – penalties to date of $2,266.76, equaling .67% of the vendor’s administrative fee.
MEASURE
Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
First Call Resolution 90% or greater
.19%
•
.33%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: Aetna completed additional training to ensure proper handling of calls when a transfer is necessary.
97% Telephone Call Quality
.19%
•
.33%: WHICH EQUALS 1 MONTH MISSED OUT OF 3 MONTHS MEASURED
•
Corrective Action: Aetna provided re-education to ensure customer service representatives follow internal processes.
E. ASI (Flexible Spending) - penalties to date of $26.67, equaling .25% of the vendor’s fee at risk.
MEASURE
Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
100% of claims will be processed within five working days
.25%
•
0.25%: WHICH EQUALS 1 QUARTER MISSED OUT OF 1 QUARTERS MEASURED
•
Corrective Action: ASI has identified two issues which caused the target to be missed and has implemented the following action items:
o
ASIFlex is currently updating the website to include in the instructions regarding faxed claims that participants should fax claim forms separately and only for their account.
o
ASIFlex has modified our practice of contacting the
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Benefit Options 2009-2010 Annual Report
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F. American Health Holding - penalties to date of $1,005.30, equaling 1.03% of the vendor’s fee at risk.
H. Successfully Met Performance Guarantees
Table 11: Successful Performance Guarantees
Vendor
At risk
Guarantees Met
UHC
18.55% Total Administration Fee
25% Medical Management Fee
Customer Service (met 17 out of 18 targets), Appeals, Claims Adjudication, Administration, Account Management Meeting, Network Management, Medical Management, Case Management, Disease Management, Nurse Line, Account Management Survey,& Member Satisfaction Survey.
AmeriBen
15% Total Administration Fee
Customer Service, Appeals (met 11 out of 12 measures), Claims Adjudication, Administration, Account Management Meeting, Reports (met 7 out of 8 measures), Finance Accounting, Member Satisfaction Survey, & Network Management (met 4 out of 6 measures).
employer first regarding enrollment issues. ASIFlex now initially denies the claim for not enrolled and then contact is made with the employer.
E. ASI (Flexible Spending) continued
MEASURE
Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
95% of identified members will be screened within 7 business days
.62%
•
0.62%: WHICH EQUALS 1 QUARTER MISSED OUT OF 1 QUARTERS MEASURED
•
Corrective Action: AHH updated reporting requirement to insure compliance with measurement.
95% of cases are identified and appropriately triaged
.41%
•
0.41%: WHICH EQUALS 1 QUARTER MISSED OUT OF 1 QUARTERS MEASURED
•
Corrective Action: AHH updated reporting requirement to insure compliance with measurement. Cigna
6.5% Total Administration Fee
6.75% Medical Management Fee
Customer Service (met 13 out of 14 targets), Appeals (met 10 out of 12 targets), Claims Adjudication (met 66 out of 72 targets), Account Management Meeting, Administration, Reports (met 2 out of 3 targets), Finance Accounting, Network Management (met 4 out of 6 targets), Medical Management, Case Management, Disease Management, Member Satisfaction Survey, & Nurse Line.
Aetna
4.5% Total Administration Fee
4% Medical Management
Customer Service (met 19 out of 21 targets), Appeals, Claims Adjudication, Administration, Account Management Meeting, Annual Member Satisfaction Survey, Reports, Network Management, Medical Management HIPPA Compliance, Case Management, & Nurse Line.
American Health Holding
Total Administration Fee 1.95%
Case Management Fee 1.87%
Disease Management Fee 1.25%
Nurse line Fee 1.25%
Utilization Management, Case Management, Disease Management, Reporting, Systems, Nurse & Other Call Center Activity.
MedImpact
$522,500.00 Total Fees at Risk
Data & Eligibility Requirements, Claims, Customer Services, Account Services, Reports, Network Access, Network Pharmacy Management, Mail Order Service, Retail Paper Claims Processing Time, Network Pharmacy POS Compliance.
Delta Dental
1.25% Total Administration Fee
Reporting, Network Management, Claims Administration, Appeals, Satisfaction, & Quality of Service and Responsiveness to Members.
TDA
1% Total Administration Fee
Reporting, Network Management, Appeals, Satisfaction, Quality of Service & Responsiveness to Members.
Hartford
10% Total Administration Fee
Report Timeliness, Quality of Service and Responsiveness to Members, Appeals/Grievance, Claims Administration, & Survey Customer Satisfaction.
Avesis
$77,250.00 Total Fees at Risk
Implementation, Reporting, Networking, Claims, Appeals, & Call.
ASI Flex
5% Total Administration Fee
Claims Turnaround (met 7 out of 8 targets), Claims Adjudication Financial Accuracy, Web Availability, & Phone Response Time.
H. Successfully Met Performance Guaranteescontinued
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Audit Services
The Benefit Services Division (BSD) Audit Services Unit provides assurances that add value and improve the operations of the BSD. Audit Services performs systematic evaluations of contract compliance, operational controls, risk management, and the implementation of best practices to support BSD objectives.
During the reporting period BSD Audit Services completed various types of audits to ensure that the health plan’s vendors appropriately provided contracted services. The audit schedule for the plan year was developed using a combination of contract elements and risk analysis. Individual audit objectives were developed with the consideration of dollar value, complexity of operations, changes in personnel or operations, loss exposure, and previous audit results. Audits were completed, but were not limited to the following four functional areas:
Functional Area
Audit Methodology
Vendor operating transactions
Statement on Auditing Standard No. 70 (“SAS 70”)
Vendor internal operating standards
Quality Management Review (“QMR”)
Vendor execution of benefit design
Plan Allowance/Exclusion Audit (“A & E”)
ADOA Accuracy of shared data
Dependent eligibility audit
All of the health plans contracted vendors that pay claims are required to provide a third-party assessed operational audit (SAS 70) annually. SAS 70 audits evaluate operational process of the vendor’s transactions and determine if identified deficiencies were appropriately addressed. Audit services reviewed the SAS 70 reports provided by each of the vendor’s external auditors. There were no instances of significant operating failure noted and no corrective action was required.
QMRs ensure the vendor’s internal audit teams were effectively measuring operating standards, identifying and correcting errors and providing sufficient training for claims processing, customer service, and clinical reviews. QMR results indicated that vendors were either meeting or exceeding internal standards and that claims processors were appropriately trained.
A & E Audits ensure that the vendor’s systems were set up correctly to service the health plan’s benefit design. A & E Audit findings for the plan year, indicated that plan limitations and restrictions were processed accurately with few exceptions and members received the benefits allowed to them as defined in the plan description.
A dependant eligibility audit was also performed on the health plan’s membership. The results of the eligibility audit indicated that only eligible individuals were enrolled in the plan and receiving benefits. Additionally, dependent eligibility is effectively monitored to minimize the risk of claims paid on behalf of ineligible dependents.
In addition to the audits, reviews and evaluations list above, Audit Services performed operational standards testing related to vendor performance guarantees, quality management standards, and reporting structure for each of the newly implemented medical vendors. Benefit Options 2009-2010 Annual Report
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Glossary of Terms
Active member – an employee, other than one excluded by the Arizona Administrative Code, who works for the State of Arizona or a State University and is enrolled in one of the health plan options offered by the State. Also referred to as “Actives.”
Administrative fees – fees paid to third-party vendors for plan administration, network rental, transplant network access fees, shared savings for negotiated discounted rates with other providers, COBRA administration, direct pay billing, additional reporting billing, State fees (MA and NY), and bank reconciliation fees.
Case management – a collaborative process that facilitates recommended treatment plans to ensure that appropriate medical care is provided to disabled, ill or injured individuals.
Claim – a provider’s demand upon the payer for payment for medical services or products.
Claim appeal – a request for a review of the denial of coverage for a specific medical procedure contemplated or performed.
COBRA Consolidated Omnibus Budget Reconciliation Act of 1985 – a federal law that requires an employer to allow eligible employees, retirees, and their dependents to continue their health coverage after they have terminated their employment or are no longer eligible for the health plan - COBRA enrollees must pay the total contribution, in addition to an administrative fee of 2%.
Contribution strategy – a premium structure that includes both the employer’s financial contribution and the employee’s financial contribution towards the total plan cost.
Copayment – a form of medical cost sharing in the health plan that requires the member to pay a fixed dollar amount for a medical service or prescription.
Deductible – a fixed dollar amount during the plan year that a member pays before the health plan starts to make payments for covered medical services.
Dependent – an unmarried child of the employee or spouse who meets the conditions established by the relevant plan description.
Disease management – a comprehensive, ongoing, and coordinated approach to achieving desired outcomes for a population of patients - These outcomes include improving members’ clinical condition and quality of life as well as reducing unnecessary healthcare costs. These objectives require rigorous, protocol-based, clinical management in conjunction with intensive patient education, coaching, and monitoring.
Eligibility appeal – a request for a review of the denial of coverage relating to a claimant’s entitlement to benefits under a plan. Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 29
Employee – a person, other than one excluded by the Arizona Administrative Code, who works for the State of Arizona or a State University.
Exclusive Provider Organization (EPO) – an exclusive provider organization or network - Enrollees are limited to use only those providers on the exclusive list. Any exceptions require prior authorization.
Flexible spending account (FSA) – an account that can be set up through the State’s Benefit Options program – An FSA allows an employee to set aside a portion of his/her earnings to pay for qualified medical and dependent care expenses. Money deducted from an employee's pay into an FSA is not subject to payroll taxes.
Formulary – a list of preferred medications covered by the health plan - The list contains generic and name brand drugs. The most cost-effective name brand drugs are placed in the “preferred” category and all other name brand drugs are placed in the “non-preferred” category.
Fully-Insured – an insurance model wherein Benefit Options collects premiums and transfers the premiums to commercial insurers who take the risk of revenue to expense.
Health Savings Account Option (HSAO) – An account that allows individuals to pay for current health expenses and save for future health expenses on a tax-free basis. Only certain plans are HSA-eligible.
Integrated – health plan operations that are provided by one entity - These operations include: claims processing and payment, a network of medical providers, utilization management, case management and disease management services.
Medicare – the federal health insurance program provided to those who are age 65 and older or those with disabilities who are eligible for Social Security benefits - Medicare has four parts: Part A, which covers hospitalization; Part B, which covers physicians and medical providers; Part C, which expands the availability of managed care arrangements for Medicare recipients; and, Part D, which provides a prescription drug benefit. Retirees signing up for ADOA insurance should enroll in Parts A and B, but not C or D.
Member – a health plan participant - This individual can be an employee, retiree, spouse or dependent.
Network – an organization that contracts with providers (hospitals, physicians, and other health care professionals) to provide health care services - Contract terms include agreed upon fee arrangements for services and performance standards.
Non-integrated – health plan operations that are provided by multiple entities - These operations include claims processing and payments, a network of medical providers, and disease management services.
Payer – the entity responsible for paying a claim. Benefit Options 2009-2010 Annual Report
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Pharmacy benefit manager – an organization that provides a pharmacy network, processes and pays for all pharmacy claims, and negotiates discounts on medicines directly from the pharmaceutical manufacturers - These discounts are passed to the employer payer in the form of rebates and reduced costs in the formulary.
Plan year – the period October 1 through September 30.
Preferred Provider Organization (PPO) – an organization that offers a broad selection of providers and the ability to choose a non-PPO provider as well - This non-PPO provider requires greater copay from the enrollee and a deductible to be paid.
Premium – agreed upon fees paid for medical insurance coverage - Premiums are paid by both the employer and the health plan member.
Retiree – a former State or State University employee, officer or elected official who is retired under a State-sponsored retirement plan - For analytical purposes, this term encompasses both actual retirees and their dependents.
Self-funded – insurance program wherein Benefit Options collects premiums, pays claims, and assumes the risk of revenues to expenses.
Self-insured – a plan that is funded by the employer who is financially responsible for all medical claims and administrative expenses.
Spouse – one legally married—as defined by the Arizona Revised Statutes—to an employee or a retiree.
Stop-loss – a form of insurance for self-insured employers that limits the amount the employer as primary insurer will pay for medical expenses.
Subscriber – employee, officer, elected official or retiree who is eligible and enrolls in the health plan.
Third party administrator – an organization that handles all administrative functions of a health plan, including: processing and paying medical claims, compiling and producing management reports, and providing customer service.
Utilization management – a process whereby an insurer evaluates the quantity (duration) and quality (level) of the delivery of medical services.
Utilization review – a process whereby an insurer evaluates the appropriateness, necessity, and cost of services provided.
Utilizer – a member who receives a specific service.Appendix A
BEGINNING CASH PER AFIS151,586,438.05$ REVENUE195,898,775.31$ EXPENDITURES158,322,242.20$ VENDORADMIN FEESPERF PENALTIESHARRINGTON396.25$ -$ AHH UR/UM249,053.85$ -$ AETNA379,601.42$ -$ CIGNA840,310.72$ -$ UHC2,885,990.23$ -$ AMERIBEN795,550.59$ -$ WHI-$ 5,000.00$ MEDIMPACT310,296.75$ -$ OTHER FEES**52,890.51$ ATTORNEY GENERAL 178.50$ NET ADMIN FEES^5,514,268.82$ 5,000.00$ 5,509,268.82$ MEDICAL CLAIMSRECOVERIES*HARRINGTON1,064.79$ 643,448.15$ AETNA4,356,826.62$ -$ CIGNA7,817,286.05$ -$ UHC74,569,190.18$ -$ AMERIBEN21,336,207.83$ 130,330.27$ WHI-$ 448,682.62$ MEDIMPACT29,518,574.39$ 1,624,323.15$ ERRP REIMBURSEMENT2,456,920.42$ RDS SUBSIDY-$ OTHER WELLNESS14,619.00$ NET MEDICAL CLAIMS137,613,768.86$ 5,303,704.61$ 132,310,064.25$ STOP LOSS PREMCLAIM REIMBSYMETRA3,916,669.00$ 3,168,251.89$ 748,417.11$ SELF INSURED EXPENDITURES138,567,750.18$ FULL SVC PREMBCBS8,569,657.03$ OTHER (COLONIAL)41.28$ TOTAL FS INS PREMS^8,569,698.31$ -$ 8,569,698.31$ DENTAL PREMPERF PENALTIESDELTA$9,130,516.14-$ TDA$946,324.22-$ NET DENTAL PREM10,076,840.36$ -$ 10,076,840.36$ HITF APPROP EXP1,107,953.35$ 1,107,953.35$ TOTAL EXPENDITURES166,799,198.70$ TOTAL RECOVERIES*8,476,956.50$ NET EXPENDITURES158,322,242.20$ ENDING CASH BALANCE PER AFIS189,162,971.16$ NON-CONTRACT EXP224,966.03TOTAL CONTRACTS VALUE166,574,232.67$ Table A: 3015 FUND PLAN YEAR 2009-2010 ADDENDUM 10/1/2010 - 12/31/2010
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 31
The HITF Fund-3015 established under A.R.S. 38-654-A is used to pay medical claims, dental premiums, and administrative and operating costs of the Wellness Program and the Benefits Services Division.
*Recoveries include Medicare Part D Retiree Drug Subsidy reimbursement, prescription drug rebates, stop loss claim reimbursements, overpayment recoveries (including stop payments and voids), subrogation recoveries, etc.
**Other fees include HSA Administration, NYHCR, MA, and legal fees.
^Vendor administrative fees and fully insured premiums are paid 55 days in arrears per contract.
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 32
Fund 3035 is established under A.R.S. 38-651.05. to pay premiums for other insurance products offered to State employees including Vision, Flexible Spending, Supplemental and Dependent Life, Short Term Disability, Non-ASRS Long Term Disability, and Basic Life insurance.
BEGINNING CASH PER AFIS4,697,559.87$ REVENUE7,526,502.26$ VENDORINSURANCEAMOUNTHARTFORDBASIC LIFE(597,717.31)$ SUPP LIFE2,883,848.62$ DEP LIFE673,778.17$ STD1,956,956.86$ LTD772,247.83$ TOTAL HARTFORD5,689,114.17$ OTHERBASIC LIFE-$ STD(23.65)$ LTD890.94$ TOTAL OTHER867.29$ AVESISVISION1,220,951.53$ ASIAMRA430,825.21$ DCRA184,744.06$ TOTAL FLEX SPENDING615,569.27$ PAYROLL CLEARING(0.00)$ TOTAL REVENUE7,526,502.26$ EXPENDITURES7,940,041.28$ VENDORINSURANCEAMOUNTHARTFORDBASIC LIFE341,194.45$ SUPP LIFE2,558,472.55$ DEP LIFE591,186.72$ STD1,705,761.74$ LTD658,627.04$ TOTAL HARTFORD5,855,242.50$ OTHERBASIC LIFE5,000.00$ STD-$ LTD-$ TOTAL OTHER5,000.00$ AVESISVISION1,076,448.88$ ASIAMRA780,768.22$ DCRA205,196.68$ ADMIN FEES17,385.00$ TOTAL FLEX SPENDING1,003,349.90$ GAO AFIS COST-$ TOTAL EXPENDITURES7,940,041.28$ ENDING CASH BALANCE PER AFIS4,284,020.85$ Table B: 3035 FUND PLAN YEAR 20009-2010 ADDENDUM 10/1/2010 - 12/31/2010
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 33
Benefit Options
Arizona Department of Administration,
Benefit Services Division
100 N. 15th Avenue, Suite 103
Phoenix, Arizona 85007
Telephone: 602-542-5008
Fax: 602-542-4744
Benefit Options 2009-2010 Annual Report
Addendum - October 1, 2010 through December 31, 2010 34